Let’s say you open a business and start a bank account. This account is used for checking and credit card sales. You deposit your sales revenues into the account and pay your employees, your rent and other expenses from the account. Sounds fairly standard and normal for any business – right? Not for your cannabis business in the United States! Our old friend, the US Controlled Substance Act, lists cannabis in all of its forms as a Schedule One narcotic thus according to the Act, having no medical purpose or value, same as heroin and cocaine. Plainly speaking, use or possession of cannabis is a crime under federal law, but not under the law of 25 states, and that list is growing – no pun intended.
The federal government also regulates banks. They don’t want to do things that might make federal banking examiners mad, or give them an excuse to audit them more than they already do. So banks simply don’t touch the stuff, cannabis-derived funds that is. If they think that your business is engaged in cannabis cultivation or sales, even if you call it “Honeydew Melons, Inc.”, they will close your account.
The result is lots of cash from cannabis sales is lying around in secure vaults. Unfortunately the feds don’t like that either. You see they get concerned when there is a lot of cash not accounted for in a bank – could come from “bad guys who don’t have bank accounts for other reasons”.. So why do they persist in this ridiculous hardship on cannabis entrepreneurs? Well, that’s the feds, and they have some problems getting this straight.
The US Treasury has said to the banks,”Go ahead and accept deposits of cash from cannabis-derived sales in the bank.” The problem is the Treasury also says that the bank has to spend a lot of time proving that the cash is from a state legal cannabis business and not some other source. It costs the banks a lot to account for all of the cash in that way, so they would rather just not bother.
There is some hope though. The Senate Banking Committee approved a measure in the US Budget proposal for FY 2017 that would prevent the feds from spending any money to punish a bank that holds funds from a state legal cannabis business. There is a long way to go from one committee to an actual law, but Congress has already deprived federal law enforcement officials money to prosecute state legal cannabis sales and grow operations, so there is hope.
As we say at Cannabis Law, “Social Change Comes Hard – but it Never Retreats” tm. This is a great example of the hard part, but change is coming.